Expert Insight: Is Your Store Future-Ready? Part 1

The EMV dilemma: Risk vs. reward, or why you need to make a conversion plan now

By 
Richard Browne, Vice President, Marketing, Patriot Capital Corp.

EMV card security

ATLANTA -- If there’s one thing that sends shivers up the spine of convenience-store owners and fuel marketers, it’s the prospect of having to fund a major improvement to their location without a clear ROI.

Such is the reaction to EMV--three small letters that loom large in the changing face of how payments are conducted worldwide. EMV, which stands for EuroPay, Mastercard and Visa, represents an effort initiated by three of the world’s largest card issuers to create a global standard to reduce payment-card fraud.

On Oct. 1, 2015, U.S. retailers will be compelled to join the worldwide wave by upgrading their indoor point-of-sale (POS) equipment to handle the new standard. (The pay-at-the-pump deadline is October 2017.)

To comply with the various brand and payment network requirements, retailers will need to upgrade their POS hardware and software, and, in some cases, their site-communications infrastructure. For POS, this could cost several thousand dollars for a complete new system, and, on average, $6,000 to $10,000 per pump for the dispenser-side conversion, according to the National Association for Convenience & Fuel Retailing (NACS).

It may be tempting to wait, but there are several reasons to develop an EMV implementation plan now:

Liability shift:After Oct. 1, retailers who cannot process EMV cards will begin shouldering the liability for fraudulent transactions on mag-stripe terminals. The specific guidance from Visa is that a retailer may be liable when a chip card is presented at a magnetic-stripe-only terminal. (See chart below.)

Consumer sentiment: According to research by Conexxus, U.S. fuel marketers lost over $250 million to credit- and debit-card fraud last year. And with skeptical consumers continuing to fall victim, being “EMV-equipped” will become a valuable distinction for retailers who offer its enhanced protective qualities.

“If somebody walks in with a chip-based card and cannot process their transaction via the EMV standard,” said Michael Tyler, senior director of petroleum channel sales for Verifone, “they’ll simply go elsewhere.”

Increased costs to change:Early-adopters will benefit from reasonably available and accessible equipment and labor to make the EMV conversions. Those who wait will likely experience a “demand-based economy,” said Tyler.

Added Parker Burke, director of payment & media for Gilbarco Veeder-Root, “As these deadlines approach, there will be much higher demand on industry resources to support site installations and upgrades.”

In Part 2 of this series, we’ll explore how the right upgrades can make your store “future-ready” and gain marketing advantage; and in Part 3, we’ll talk about capital acquisition and financing options that can alleviate the pain of making these capital improvements.

Richard Browne, Patriot Capital Corp. By Richard Browne, Vice President, Marketing, Patriot Capital Corp.
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